By: Atty. Ludanielle N. Legarde
The term “Official Receipt” as commonly used in the Philippine has forever changed as we know it. Due to the Ease of Paying Taxes (EOPT) Act, R.A. No. 11976 (2023), the Bureau of Internal Revenue (BIR) issued BIR Revenue Regulations No. 7-2024 (April 11, 2024) to implement the amendments on Registration Procedures and Invoicing Requirements Tax provisions.
An Invoice is now considered as the Principal Document in a sales transaction, it is defined as a written account evidencing sales of goods and/ or services issued to customers in the ordinary course of business. This includes Sales Invoice, Commercial Invoice, Cash Invoice, Card/ Credit Invoice, Service Invoice or Miscellaneous Invoice. Also referred to as the “principal invoice”. Categorized as either- (1) VAT Invoice (2) Non- VAT Invoice.
An Invoice now primarily serves as a written admission or acknowledgement of the fact that money has been paid and received for the payment for both goods and services.
On the other hand, Official Receipts are now considered as Supplementary Documents in a sales transaction. Supplementary Documents are written documents other than sales or commercial invoice, which serves as a source of accounting entries in the books of accounts.
This includes but are not limited to official receipt, delivery receipt, order slip, debit and/ or credit memo, purchase order, acknowledgement or cash receipt, collection receipt, bill of lading, billing statement, statement of account and any other documents by whatever name is known or called whether prepared manually (hand written information) or pre-printed/ pre-numbered loose leaf (information typed using spreadsheet program or type writer) or computerized as long as they are used in the ordinary course of business and being issued to customers.
Please take note that for VAT purposes, Supplementary Documents are not valid proof to support the claim of input taxes by the buyers/ purchasers of goods and/ or services.
As to invoicing and accounting requirements, all VAT registered persons and those required to register for VAT shall comply with the following:
- Invoicing Requirements
- A VAT-registered person shall issue a duly registered VAT Invoice for every sale, barter, exchange or lease of goods or properties for every sale, barter or exchange of services regardless of the amount of transaction.
- A VAT Invoice shall be issued as evidence of sale of goods and/ or properties and sale of services and/ or leasing of properties issued to customers in the ordinary course of trade or business, whether cash sales or on account (credit), which shall be the basis of the output tax liability of the seller and the input tax claim of the buyer.
- Information Contained in a VAT Invoice.
- A statement that the seller is a VAT-registered person followed by the seller’s Tax Identification Number (TIN) and Branch Code.(e.g., VAT Reg TIN 123-456-789-0000);
- The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the VAT; provided that:
- The VAT amount in shown in a separate item;
- The term “VAT- Exempt Sale” is written or printed, if the sale is VAT Exempt;
- The term “Zero-Rated-Sale” is written or printed, if the sale is zero percent (0%) VAT;
- If the sale involves goods, properties or services some of which are subject to and some of which are VAT Zero Rated or VAT Exempt, the invoice shall clearly indicate the breakdown of the sale price between taxable, exempt and zero rated components and the calculation of the VAT on each portion of the sale shall be shown on the invoice: Provided, that the seller may issue separate invoices for the taxable, exempt and zero rated components of the sale;
- The date of transaction, quantity, unit cost and description of the goods or properties or nature of service;
- In the case of sales in the amount of P1, 000.00 or more where the sales or transfer if made to a VAT registered person, the registered name or name, address and TIN of the purchaser, customer or client;
- Other information required under Section 6(B) of these Regulations.
Please take note that under Section 3 (D) Par. 3, the lack of information required under Section 3 (B) of these regulations- if a VAT registered person or seller issues a duly registered VAT Invoice to another VAT registered person or buyer/ purchaser with lacking information required undersection 3(B) of these Regulations, the seller or issuer shall be liable for non-compliance with the invoicing requirements. However, the VAT amounts shall still be allowed to be used as input tax credit under Section 110 of the Tax Code, on part of the purchaser or buyer, except if the lacking information pertains to the following:
- Amount of sales;
- VAT Amount;
- Registered name and TIN as shown on the Bureau of Internal Revenue (BIR) Certificate of Registration of the both purchaser or buyer and issuer or seller;
- Description of goods or services; and
- Date of transaction.
Now the common question is to the application of this this regulation and as to what will happen to the unused official receipt. All unused or unissued Official Receipts may still be used as supplementary documents until fully consumed, provided that this phrase “THIS DOCUMENT IS NOT VALID FOR CLAIM OF INPUT TAX” is stamped on the face of the document upon effectivity of the regulations. Under Par 2.2, For ease of doing business, the tax payers shall be allowed to strikethrough the word “Official Receipt” e.g., Official Receipt on the face of the manual and loose leaf printed receipt and stamp “invoice”, “Cash Invoice”, “Charge Invoice”, “Credit Invoice”, “Billing Invoice”, “Service Invoice”, or any name describing the transaction, and to be issued as primary invoice to its buyer/ purchaser until December 31, 2024. These documents shall be valid for claim of input tax by the buyer/ purchaser for the period issued from January 22 to December 31, 2024, provided that the invoice shall contain all the information required under Section 6(B) of these Regulations. The converted Invoice as defined in Section 2 hereof can serve as proof of sales transaction and proof of payment at the same time.
This should also not be taken as an opinion on the topic. For more details and information, you may coordinate with any GVES Law Partner regarding the matter.
Atty. Ludanielle N. Legarde is a Partner of GVES Law.